Survivorship bias is a game the mutual fund industry plays with investors to make you think they have superior skills. They essentially open up a bunch of funds, then keep the winners and close the losers. After they close the loser funds, the track record is wiped from history and the investing public only sees the remaining open funds, which gives the appearance of a huge percentage of excellent funds. Fortunately for us, we don't own any of the fund companies that play that game.
Continue to learn, stay diversified according to your risk tolerance, stay disciplined, and rebalance. Education is your best defense against imprudent investing. Invest intelligently!
Past performance is no guarantee of future results.
▪ John and Scott
The 5 Largest Wealth Destroyers (12:57)
In this video Michelle explains how much wealth can be destroyed by active managers. It can be a particularly big problem when you use active managers that manage funds that are not diversified and only hold one asset class. Under performance in stock funds is pervasive in the industry, but check out the top 5 wealth destroyers according to Morningstar.
This is why it pays to have a broadly diversified portfolio and rebalance when necessary. It’s a good thing we don’t own any of the funds in this video that promote “top research” departments. Since even the professionals have a tough time “picking stocks” with their research departments, this information from Morningstar demonstrates that broad based diversification is more important than research…because quite simply, anyone’s research can be flawed for a number of unexpected reasons. Stay diversified in low correlated assets, adjust your risk so you can stay disciplined, and rebalance when necessary so you don’t have to try and predict or forecast the future.
Continue to learn, stay diversified according to your risk tolerance, stay disciplined, and rebalance. Education is your best defense against imprudent investing. Invest intelligently!
Past performance is no guarantee of future results.
▪ John and Scott
The Mutual Fund Shell Game: Hiding Losers (9:38)
The financial industry likes to hide their losers. Check out this video to see how Wall Street's law of large numbers shell game turns into the mysterious mutual fund and exchange traded fund vanishing act…and the poor performance that is never to be seen again by unsuspecting investors. Work with an investor coach that knows which companies play the game of hiding bad performance.
Continue to learn, stay diversified according to your risk tolerance, stay disciplined, and rebalance. Education is your best defense against imprudent investing. Invest intelligently!
Dedicated to Your Peace of Mind,
John Borger & Scott Buchanan
Past performance is no guarantee of future results.
Mutual Funds: Don't Follow the Stars (7:15)
How do Morningstar's five star funds fare in the long run? Is the star system a reliable way to choose good investments? Have you ever been burned by a five star fund? Should you pick mutual funds based on stars alone? Probably not such a good idea.
Stars are but one small factor. Asset allocation, broad based diversification, and getting your risk category right are more important than picking the stars. Check out this video to find out why.
Continue to learn, stay diversified according to your risk tolerance, stay disciplined, and rebalance. Education is your best defense against imprudent investing. Invest intelligently!
Dedicated to Your Peace of Mind,
John Borger & Scott Buchanan
Past performance is no guarantee of future results.
Vanguard Active Management (7:47)
Is Vanguard selling out their investors for money? Check out the information in this video to see how "no load" mutual fund companies potentially cost their investors money when dabbling in active management.
Continue to learn, stay diversified according to your risk tolerance, stay disciplined, and rebalance. Education is your best defense against imprudent investing. Invest intelligently!
Dedicated to Your Peace of Mind,
John Borger & Scott Buchanan
Past performance is no guarantee of future results.
The Difference Between Luck & Skill in Returns (17:19)
Do you understand the difference between luck and skill when investing? Most money managers (and individual investors for that matter) do not have the skill to outperform market returns in both stock and bond markets. The results are dismal for active managers and active individual investors. There are very few lucky managers and individual investors that beat the market, but there is no way to identify these people in advance.
The financial industry (books, magazines, newspapers, newsletters, financial TV, internet) all try to make you believe they can make you more money by picking stocks or timing the markets. The statistics prove otherwise. It is important to remember that returns come from the markets, not from the managers.
It is more important for lifetime investing success to learn to control your fear and greed behavior than it is to try and pick the “right” stocks or time the markets.
Continue to learn, stay diversified according to your risk tolerance, stay disciplined, and rebalance. Education is your best defense against imprudent investing. Invest intelligently!
Past performance is no guarantee of future results.
▪ John and Scott
American Funds & International Diversification (16:17)
Can diversification stop American Funds bleeding? Check out the latest news on one of the biggest mutual fund families in the industry. Are they playing games with their investor's money? Watch & you decide. Join us as we dig into this article from Investment News and look at why American Funds now thinks that diversification is a good idea. For more detailed information, please contact us or your financial coach for a prospectus.
Continue to learn, stay diversified according to your risk tolerance, stay disciplined, and rebalance. Education is your best defense against imprudent investing. Invest intelligently!
Dedicated to Your Peace of Mind,
John Borger & Scott Buchanan
Past performance is no guarantee of future results.
▪ John and Scott
The Prudent Bear Fund Oxymoron (15:34)
The Federated Prudent Bear fund is not just an oxymoron, but an example of everything that can be done wrong in investing. Investors have been losing money in this fund for the last 15 years. Find out how NOT to diversify a portfolio. There are some important lessons in this video. Learn how not to be prudent.
Since 1926, the market was up 75% of the time. From 1926-2010 , the average bull market was up 119% and the average bear market was down 27%. If you got those odds in Vegas, you couldn't get a seat at the table! Yes, there is risk in the markets, but the better way to control risk is to add the necessary percentage of fixed income to your portfolio to the extent you cannot take the volatility, and then rebalance when your portfolio gets out of balance. Watch this video and learn an important lesson on how not to try and control risk.
Continue to learn, stay diversified according to your risk tolerance, stay disciplined, and rebalance. Education is your best defense against imprudent investing. Invest intelligently!
Past performance is no guarantee of future results.
▪ John and Scott
Mutual Fund Conflicts (1:35)
Check out this major conflict of interest with mutual fund and brokerage firms! The brokerage firms love high turnover mutual funds, because all the trading makes them more money. In fact, some of the brokerage firms also create mutual funds. How is that for self interested conflicts of interest? We do our best to avoid this issue by using mutual funds with lower turnover, and lower hidden fees.
Continue to learn, stay diversified according to your risk tolerance, stay disciplined, and rebalance. Education is your best defense against imprudent investing. Invest intelligently!
Past performance is no guarantee of future results.
▪ John and Scott
Commodities Funds Can Increase Risk (22:59)
Have you ever wondered what futures are? Don't follow the herd. People only ask for something after it has been hot. Watch this video and find out how risky they are, and how some advisors promote risky commodities funds that are futures. They often justify it under the disguise of diversification. You don't need to double down on leveraged commodities. If you have a diversified portfolio, you already own companies that deal in commodities. Mark shows some examples. It's already in there!
Continue to learn, stay diversified according to your risk tolerance, stay disciplined, and rebalance. Education is your best defense against imprudent investing. Invest intelligently!
Past performance is no guarantee of future results.
▪ John and Scott
Financial Industry Illusions - Investor Beware! (26:34)
In this video, Scott teaches us some of the shenanigans that go on behind the scenes of the financial industry. Scott teaches about gurus, information overload, expert stock pickers, mutual fund games, and much more. This is stuff few in the financial industry want you to know. There is just too much money to be made off of deceiving investors.
Side note: Yes, we do use mutual funds in our portfolios, but we do not use mutual funds that play the games mentioned in the video. Both Scott and myself invest in the same funds we recommend to our clients.
Continue to learn, stay diversified according to your risk tolerance, stay disciplined, and rebalance. Education is your best defense against imprudent investing. Invest intelligently!
Past performance is no guarantee of future results.
▪ John and Scott
Morningstar Warning (9:38)
Star ratings may be good when evaluating hotels, but not necessarily good when creating a diversified portfolio. Sometimes Morningstar does not get the fund category accurate, and therefore the fund ranks higher or lower than it should. More importantly, star rankings only rank past performance, and there have been numerous studies that show, the top fund over a given 5 or 10 year period rarely if ever stay at the top of their category.
In effect, the only way to pick the best funds in each category, is to know in advance which ones will be best going forward. It should be self evident that this is impossible. Yet, there are some investors (and advisors that try and convince investors), that think they have this forecasting ability to see the future. It is more important to allocate your portfolio properly, and rebalance so you don't have to try and predict and forecast. Check out this video if you are tempted and awed by the "stars."
Continue to learn, stay diversified according to your risk tolerance, stay disciplined, and rebalance. Education is your best defense against imprudent investing. Invest intelligently!
Past performance is no guarantee of future results.
▪ John and Scott
Vanguard Funds - Is Cheaper Better? (30:17)
You should definitely check out these Matson Live segments where we had a discussion that surrounded being a coach vs. being a facilitator using DFA and Vanguard as our case study. We used research from Duke University for our show. We explain how "cheaper" is not always better and can be extremely costly to your portfolio.
Continue to learn, stay diversified according to your risk tolerance, stay disciplined, and rebalance. Education is your best defense against imprudent investing. Invest intelligently!
Past performance is no guarantee of future results.
▪ John and Scott
Myths of Active Mangement in Down Markets (7:32)
In this video, we take on the myth that active management works in down markets while we unveil some alarming statistics on actively managed funds, and their success rates.
Continue to learn, stay diversified according to your risk tolerance, stay disciplined, and rebalance. Education is your best defense against imprudent investing. Invest intelligently!
Past performance is no guarantee of future results.
▪ John and Scott
Law of Large Numbers Illusion (9:48)
Let’s open a mutual fund company! In this video John shows how some mutual fund companies create the illusion that they have the best funds. If you are an educated investor, you won’t be duped. We play a fun game to demonstrate just one of the illusions mutual fund companies use…The Law of Large Numbers. There are a lot of good things about the financial industry, but there are also a lot of shenanigans. As investors, you need to be aware.
Find out who became the Money Manager of the Decade in this group of investors.
Continue to learn, stay diversified according to your risk tolerance, stay disciplined, and rebalance. Education is your best defense against imprudent investing. Invest intelligently!
Past performance is no guarantee of future results.
▪ John and Scott
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